California-based Sungevity has inked a partnership deal with Netherlands utility E.ON Benelux to jointly offer solar energy services. Under the arrangement, Sungevity will use its solar design and marketing platform to reach the utility's customers on a co-branded basis.
In preparation for the partnership, E.ON made an investment in Sungevity in April. The following month, Sungevity used the capitalization from this and other investors, including GE Ventures, to expand its holdings in Dutch solar company Zonline into full ownership. The latter entity will operate as Sungevity Netherlands.
According to Sungevity CEO Andrew Birch, the Netherlands is an example of a market where solar power has achieved at least grid parity with other power sources. This is the culmination of decades of falling solar costs, combined with retail electricity rates rising by 4% to 5% per year for 40 years.
‘Obviously, the lines have to cross,’ Birch says. ‘What is fascinating for somebody like myself who has been in the industry for over 10 years is seeing how we are now live in markets that are at parity.’
This is especially pronounced in Europe, Birch says, and the Netherlands represents the bridgehead of a long-term strategy to enter other European grid parity markets. Citing his company's research, Birch says eight of 11 markets it studied in Europe are at parity.
‘The reason this deal is live in the Netherlands and not somewhere in United States is that Europe is further along the curve on solar,’ he says. ‘They are about three to five years ahead in terms of penetration and deployment of megawatts. And so the utilities are much more affected by it – more so than the utilities have been affected by the shift to distributed energy in the U.S.’
In the U.S., Sungevity has a partnership with Lowe's to sell solar power systems to its customers through its retail locations. Birch says his company is in discussions with utilities in the U.S., but no partnerships have yet been forthcoming. U.S. utilities just have not felt the need, he says. On the other hand, European utilities are already living with the reality of extensive penetration of distributed energy sources, including solar and wind.
‘Hundreds of billions of dollars have been wiped off their market capitalizations because of the penetration of distributed generation,’ he says. ‘So they are much more empowered to make this transition.’
This is where partnerships come into play. Even in a grid parity market such as the Netherlands, Birch says direct marketing is an incredibly expensive and inefficient way to grow a business and grow a market. E.ON has 20 million customers, he says, with an interest in cost-effective energy. For its part, Sungevity has spent seven years developing its ability to sell solar power systems – a capability E.ON will be able to use to sell electricity in new ways.
‘Selling distributed energy is a very different thing than selling centralized power,’ Birch says. ‘That's the value we bring.’
Birch says Sungevity expects its partnership with E.ON to expand to other grid parity markets in Europe in the near future.